Suppose Aggregate Demand Increases by More Than Expected

question 346

Multiple Choice

Suppose aggregate demand increases by more than expected. Which of the following describes what will occur?

• A) The price level will increase.
• B) Unemployment will fall.
• C) Real GDP will be greater than potential GDP.
• D) All of the above answers are correct.

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Definitions:

Inborn Tendencies

Natural instincts or inclinations that are present from birth, reflecting genetic or inherent characteristics of an individual.

Arousal Stimulation

Refers to activities or stimuli that increase physiological and psychological activity or alertness.

Temperamental Style

An individual's natural disposition or innate behavior tendencies that are evident from early life.

Effortful Control

The ability to regulate one's behavior, emotions, and thoughts in the face of temptations and impulses, essentially exercising self-control.